Markets and funds rising this week

talexuser

I'd welcome a crash before April. I need to use up 3 lots of 12K3 CTG allowances to dump some Excess Reportable Income funds and swap for equivalent UK based ones just for convenience. Every jump in prices means being able to sell less and less :-))

p.s I've been invested since the early 90s and never sold anything during any downturn - never invest what you need short term and buy if you can when a crash happens.

Thrugelmir

IvanOpinion said:

I have no idea what goes through the minds of dealers, but I have seen it mentioned in various finance related articles over the years and on some years noticed a minor drop just before christmas.  That could be down to people settling or rebalancing at the year end (or end of a financial quarter); self fulfilling dogma that markets drop during longer holidays; fewer people trading.  Sometimes they rally before bank holidays; sometimes they drop in October; some people say to sell in May.  The markets are subject to seasonal trends and the impact of holidays - but it is usually short lived.

Open futures trades get closed at the end of every month/quarter. Many global markets are shut are differing times over Xmas. Not being in a position to trade could prove extremely costly. 

bostonerimus

John464 said:

redpete said:

I love playing with numbers and happy to log prices / values once a week. 

Will you still love it when the next crash comes?

If you are frugal, have some cash in the bank and have a sensible asset allocation then “crashes” should not worry you as they are part of the normal cycle; I’ve been through three or four of them. If you are young you have plenty of time to recover and if you are old your asset allocation and income sources should be designed to mitigate crashes.

IvanOpinion

eskbanker said:

IvanOpinion said:

I have no idea what goes through the minds of dealers, but I have seen it mentioned in various finance related articles over the years and on some years noticed a minor drop just before christmas.  That could be down to people settling or rebalancing at the year end (or end of a financial quarter); self fulfilling dogma that markets drop during longer holidays; fewer people trading.  Sometimes they rally before bank holidays; sometimes they drop in October; some people say to sell in May.  The markets are subject to seasonal trends and the impact of holidays - but it is usually short lived.

It is like asking why do shops shut on a Sunday or over christmas, just an arbitrary date but yet we seem to be a bit of an arbitrary pattern driven species.

I don't think the analogy works at all - retail opening hours, regardless of historical reasons, are known and published.

You would have to take that one up with those that have reported such behaviour in the past.  I have never said that that is the case, only that I guessed it might be a case based on what those with a lot more experience than me reported.  Everyone else is free to guess what they think may happen and they will have exactly the same chance of being right or wrong as I have.

eskbanker

IvanOpinion said:

eskbanker said:

IvanOpinion said:

I have no idea what goes through the minds of dealers, but I have seen it mentioned in various finance related articles over the years and on some years noticed a minor drop just before christmas.  That could be down to people settling or rebalancing at the year end (or end of a financial quarter); self fulfilling dogma that markets drop during longer holidays; fewer people trading.  Sometimes they rally before bank holidays; sometimes they drop in October; some people say to sell in May.  The markets are subject to seasonal trends and the impact of holidays - but it is usually short lived.

It is like asking why do shops shut on a Sunday or over christmas, just an arbitrary date but yet we seem to be a bit of an arbitrary pattern driven species.

I don't think the analogy works at all - retail opening hours, regardless of historical reasons, are known and published.

You would have to take that one up with those that have reported such behaviour in the past.  I have never said that that is the case, only that I guessed it might be a case based on what those with a lot more experience than me reported.  Everyone else is free to guess what they think may happen and they will have exactly the same chance of being right or wrong as I have.

I disagree - not all guesses are equal!  Anyone brave enough can take a stab at future market directions but those citing credible macroeconomic or geopolitical factors are more likely to be right than those believing (a) that there will be unusually high trading levels solely due to reaching December and (b) that these will reduce market valuations....

masonic

Brokers seem to like these beliefs and guesses

https://www.ig.com/uk/santa-rally

I suppose it helps that some of the same arguments can be used to justify opposing effects (e.g. lower volumes, closing out positions / rebalancing causing prices to both rise and fall). I particularly like what IG did, suggesting it is best to sell everything at the beginning of December, then buy it back in the middle of December.

IvanOpinion

masonic said:

Brokers seem to like these beliefs and guesses

https://www.ig.com/uk/santa-rally

I suppose it helps that some of the same arguments can be used to justify opposing effects (e.g. lower volumes, closing out positions / rebalancing causing prices to both rise and fall). I particularly like what IG did, suggesting it is best to sell everything at the beginning of December, then buy it back in the middle of December.

That is exactly what I was thinking about in my earlier post but had no idea it had an actual name.  I agree with eskbanker about some random arbitrary calendar date having an impact but, weirdly, there is some evidence that these things do happen. 

I never buy or sell in December anyway, for no other reason than I am too busy doing other things.

eskbanker

masonic said:

Brokers seem to like these beliefs and guesses

https://www.ig.com/uk/santa-rally

I suppose it helps that some of the same arguments can be used to justify opposing effects (e.g. lower volumes, closing out positions / rebalancing causing prices to both rise and fall). I particularly like what IG did, suggesting it is best to sell everything at the beginning of December, then buy it back in the middle of December.

Interesting, although, as might be expected, opinion is divided on root causes!

What causes a Santa rally?

Quite why this phenomenon should occur is unclear, and in truth there are probably several factors behind each individual rally. But a few of the major theories on why markets rally in December include:

• Seasonal goodwill among investors, who are more willing to buy around Christmas
• Markets rising on lower volumes over the holiday period
• Fund managers rebalancing their portfolios before the end of the year
• People investing their Christmas bonuses
• Bargain hunting before stock prices rise in January (known as the January effect)

However, the biggest cause of a Santa rally may well be the psychology of the markets themselves. If indices post gains in December, people assume a Santa rally is on the cards and buy accordingly – leading to further gains.

Albermarle

• Bargain hunting before stock prices rise in January (known as the January effect)

That is a new one on me ! I assumed in January most people would feel a bit gloomy and pessimistic . However I guess how we feel in UK has little effect on global markets .